On the go and no time to finish that story right now? Your News is the place for you to save content to read later from any device. Register with us and content you save will appear here so you can access them to read later.

A "loyalty" scheme to sweeten state assets sales for investors could cost the taxpayer $500 million - more than $100 for every man, woman and child in New Zealand - according to Treasury numbers.

At the National Party conference at the weekend, Prime Minister John Key confirmed that the loyalty bonus scheme for the Mighty River Power sale this year would be used as the model for part-sales of the other power companies to be partially privatised under his Government's "mixed-ownership model".

Mr Key indicated the scheme is likely to be in the form of extra shares for investors who hold their original stakes for three years.

The scheme is likely to be similar to the one the Queensland Government used when it sold Queensland Rail in 2010. It offered Queenslanders one extra share for every 15 they held.

In a report to the Cabinet last year, the Treasury said incentives to encourage local investors to buy shares "typically range from 5 to 10 per cent of total value ($250 million to $500 million based on a $5 billion programme)".

The Government says it expects to raise $5 billion to $7 billion via the sales programme.

Based on the Treasury's $500 million upper estimate of the cost of a loyalty scheme, the forgone revenue works out to just under $113 for every man, woman and child here.

In a separate report last week, Parliament's finance and expenditure committee noted that using the Queensland Rail model across all of the "mixed-ownership" companies would cost about $360 million, or just over $80 for every New Zealander - less than the Treasury's estimate.

Asked yesterday about that report, Mr Key said it hadn't been decided what the loyalty scheme might finally look like, but the committee's $360 million was "a possible number".

"I haven't seen their workings so I wouldn't want to agree with that at this point."

He acknowledged there would be some cost to the scheme, "but I think it will be an investment worth making in terms of encouraging long-term shareholding by New Zealanders".

Yesterday, Labour Party leader David Shearer said the scheme was an unfair transfer of wealth from those who couldn't afford to buy shares to encourage those who could.

He said the plan meant the taxpayer was covering the cost of the scheme to benefit private investors.

"That is simply not fair. The bottom line is the Government hasn't been clear about how much this loyalty scheme is going to cost but what we do know is this will come off the amount the public will receive for selling off the asset," Mr Shearer said.

"Effectively, the taxpayer will be paying for a loyalty scheme that a small number of New Zealanders who can afford to buy shares will be able to enjoy. It's clear there's some real winners here, and the losers are most New Zealanders."

In its report last year, the Treasury said past experience suggested that significant incentives might not be required, "and their use should be kept in reserve given the trade-off with the Government's fiscal objective that their use involves".

DO THE MATHS* The Treasury says incentives to encourage locals to participate in share floats such as the mixed-ownership model typically cost 5 to 10 per cent of the value raised.* The Government expects to raise $5 billion to $7 billion through its mixed-ownership model.An incentive scheme on a $5 billion programme could cost the taxpayer $500 million, or $112.76 for every man, woman and child in the country.